Novelli Corporation makes a product whose variable overhead standards are based on direct labor-hours. The quantity standard is 0.6 hours per unit. The variable overhead rate standard is $5.00 per hour. In September the company produced 1,600 units using 950 direct labor-hours. The actual variable overhead rate was $5.10 per hour. The variable overhead rate variance for September is:
A)$95 F
B)$96 U
C)$95 U
D)$96 F

Question

Quizplus · Accepted Answer

Variable overhead rate variance = (actual rate - standard rate) x actual hours

= ($5.10 - $5.00) x 950

= $95 U (unfavorable because the actual rate was higher than the standard rate)

Therefore, the correct answer is option C.

Novelli Corporation Makes a Product Whose Variable Overhead Standards Are